Perry’s Angry Critics

October 25, 2017

It was the 17th century English playwright William Congreve who claimed “Hell hath no fury like a woman scorned.” Congreve never met the renewable fuels industry.

Wind and solar proponents, feeling scorned by Energy Secretary Perry, reacted with righteous anger to his request that the Federal Energy Regulatory Corporation (FERC) allow utilities to recover the reliability value of competing baseload plants. The Secretary, they said, was meddling in the energy market and showing raw favoritism. And the renewable industry will have none of government meddling and favoritism.

If there are persuasive, credible criticisms of the Secretary’s proposal, these aren’t among them. And if anyone could make them credible, it isn’t the renewable industry.

The government has frequently intervened in the power generation market and has often shown favoritism. More recently, it has moved to euthanize older coal plants with regulations, and shower renewable fuels with production and investment tax credits. When state governments meddled in the market by guaranteeing renewables market share with portfolio standards, where were the indignant complaints?

Considering the source of these criticisms, they are more likely to bring smiles than agreement. Government largess is to renewable fuels what water is to fish.

The Production Tax Credit for wind expired five times from 1999 to 2013, and after each of these expirations domestic investment fell between 76 percent and 92 percent. [AWEA] Coincidence?

In addition to the PTC’s $24/MWh gift for the first decade of a project’s life, power purchase agreements can equal that subsidy for 20 years or more [2016 Wind Technologies Report by the Lawrence Berkeley National Laboratory]. This generous safety net drives wind producers to offer below-market prices just to ensure they run and collect on the taxpayers’ dime.

The industry’s PR says its energy sources are lower cost than baseload power. But the industry’s lobbyists tell Congress that without subsidies capacity cannot be built fast enough to satisfy renewable mandates. The PR and the lobbying teams need to talk; they can’t both be right.

Ironically, it’s to offset this very market intervention that Perry’s cost recovery proposal for baseload plants is necessary in the first place. Government-assisted renewable power has not been additive to, but has grown in place of, baseload power. Allowing wind to enter the market at below-market prices inevitably leads to coal “withdrawing as uneconomic,” to use EPA’s Orwellian euphemism for retirement.

This was the muscular federal intervention – with regulations like the Mercury and Air Toxics Rule and the PTC – that picked renewables to win and picked coal to lose or announce planned retirement of 101,000 MW of power plants in the past seven years.

Meanwhile, FERC largely stood by and watched this baseload obliteration. Led by Wellinghoff and then Lafleur, the dithering grid guardian simply accepted EPA’s soothing estimates that MATS would cause less than 10 GW of retirements while ignoring experts who broadly questioned them. [Comments by C. McConnell, former assistant energy secretary for fossil energy] After the PJM warned EPA that MATS would force into retirement well more than 10 GW just in its operating region alone, EPA reacted by dropping its retirement estimate to 4.7 GW.

The North American Electric Reliability Corporation would soon put the actual loss at 60 GW by 2018.

A little more intervention by the commission then might have spared the need for more intervention today.